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Ask Us ‘You cannot avail RCM benefits if your annual commission including all products exceeds Rs.20 lakh’

‘You cannot avail RCM benefits if your annual commission including all products exceeds Rs.20 lakh’

GST norms include commission income from all financial products such as insurance, stock broking and mutual funds to arrive at your annual income.
Nishant Patnaik Nov 13, 2018

One of readers requesting anonymity wrote to us with this problem.

My annual income from mutual fund commission is Rs.12 lakh a year. However, I earn more than Rs.20 lakh if I include my commission income from insurance. Am I eligible to avail RCM benefits under GST?

Dear distributor,

You cannot avail the benefits of reverse charge mechanism (RCM) under GST norms as you have commission income exceeding Rs.20 lakh per annum.

GST norms include commission income from all financial products such as insurance, stock broking and mutual funds to arrive at your annual income.

Last month, the government has deferred the implementation of RCM until March 2019. The move has benefited mutual fund distributors who do not have GST registration number. In addition, the distributors who have taken GST registration number can cancel their existing GST registration to avail this benefit if their annual commission income from all financial products is less than Rs.20 lakh a year.

However, you can continue to avail the benefits of input credit.  AMCs pay the gross commission to distributors who have GST registration number.

Both CAMS and Karvy Computershare offer facilities to help you raise GST invoices and comply with the GST norms. R&T agents offer host of services to you to comply with GST norms – from entity registration, to uploading invoice details, filing of returns, raising and submitting GST invoice, verify and e-sign it online. Once submitted, these invoices will be available for both IFAs and AMCs to complete their GST return filing. In addition, these invoices will be available for any future reference and download as well.

Note: We have written this article based on the inputs from tax experts and operational heads of a few fund houses and R&T agents. We intend to clarify your doubts on GST. This does not tantamount to be a tax advice of any nature or a recommendation. Please take advice from a qualified tax advisor for your guidance.

 

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2 Comments
P. Bandyopadhyay · 4 months ago
My earning is less than Rs 20 lakhs while including all brokerage , commission etc. I do not have GST registration no. Please give steps to follow to enjoy Reverse Cost Mechanism.
AMIT KUMAR JAIN · 4 months ago
i do not agree. IF I AM GIVING SERVICE TAX CONSIDERING COMISSION RECEIVED AS COMISSSION / 118*18 AND COMISSION IS GOING FROM MY POCKET AND NOT AMC, WHY REVERSE CHARGE COMISSION CANNOT BE SET OFF IF THE PARTY TO WHOM I HAVE GIVING IS UNREGISTERED AND THAT'S WHY I AM GIVING HIS PART OF SERVICE TAX IN REVERSE CHARGE. IT'S AGAINST THE BASIC PRINCIPLES OF GST.
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